Most Read Contributor in British Virgin Islands, January 2017
The political and economic rollercoaster ride we've been on
here in the UK since the EU referendum in June seems set to
continue following Thursday's High Court judgment in
London1. The High Court held that the UK government
doesn't have the power to give notice to withdraw from the
European Union under Article 50 of the Lisbon Treaty. Only
parliament has the power to change domestic law in the UK and, as
serving notice to leave the EU will affect rights under domestic UK
law, the government can't serve notice without parliament's
So, just as we'd started to get used to the idea of notice
being served by the government in March 2017, with the UK then
leaving the EU by March 2019, the Brexit process has now been
thrown up in the air again.
Keep calm and stay in London?
For offshore funds and their managers, the period of uncertainty
(as Ollie blogged about recently) over what
Brexit means for them in reality seems set to continue for a long
while yet. There is however a growing sense among investment
managers of offshore funds here in London that, whatever the
outcome of the Brexit negotiations with the rest of Europe, a
solution will be found to allow managers to keep calm and stay in
London (or elsewhere in the UK).
Increasing numbers of alternative structures are being
considered, including keeping an existing UK FCA regulated
investment manager and using an AIFM platform in eg Luxembourg or
Ireland, or setting up a management company in another EU
jurisdiction such as Luxembourg which could then delegate or
outsource various functions back to the UK. Other parts of the UK
financial services industry, including much of the banking
industry, are more heavily reliant on passporting rights under the
relevant European legislation so moving parts of their operations
out of the UK is having to be
considered seriously by them. It's difficult for anyone to
finalise a plan at the moment though when no-one can know at this
stage what post-Brexit UK will actually look like.
As was widely expected, the government is appealing the
court's ruling to the Supreme Court, with a hearing expected in
early December and the judgment hopefully being handed down before
Christmas. So Theresa May's timetable of serving notice before
the end of March 2017 could still happen if the government wins its
appeal. Given the twists and turns we've had so far though,
it's hard to predict what else Brexit has in store for us all
before we reach the end of the ride.
1 R (Milller) v Secretary of State for Exiting the
European Union  EWHC 2768
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